TOP NEWS: Rio Tinto Rejects Glencore; Cairn Finds Oil In Senegal

LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Mining giant Rio Tinto said it was contacted by Glencore in July regarding a potential merger of the two companies but rejected the proposal, saying it was not in the best interests of Rio Tinto shareholders. Rio Tinto confirmed that no talks are taking place with Glencore at present. "The board's rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter," Rio Tinto said in a statement.
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Private equity group TPG has emerged among a group of potential suitors considering a bid for the marketing group behind Tesco's Clubcard loyalty scheme, Sky News reported Tuesday. The buyout firm is understood to have made an approach to Tesco over acquiring Dunhumby, a wholly-owned subsidiary of the supermarket group, in a deal that would be worth over GBP2 billion, Sky News said. Tesco is believed to be considering its ownership of Dunhumby amid a wider review of its business being overseen by new Chief Executive Dave Lewis.
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A fifth executive is understood to have been suspended by Tesco over the supermarket group's overstatement of its first-half profits, Sky News reported. Kevin Grace, the group commercial director, is understood to be the latest executive suspended, Sky News said. The company suspended four executives in September, including UK Managing Director Chris Bush and UK Finance Director Carl Rogberg, after it said it had overstated its profit guidance for the first half by GBP250 million.
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Virgin Atlantic Airways is to stop running its Little Red domestic service in the UK next year, the BBC reported on Monday. Flights operated by Little Red, launched in 2013 in an attempt to challenge British Airways, part of International Consolidated Airlines Group, between London and Manchester will stop in March, with flights to Edinburgh and Aberdeen to end in September 2015.
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Cairn Energy said oil has been discovered in an exploration well offshore Senegal that it has a 40% working interest in, and it thinks it may have significant potential as a standalone discovery as well as raising the potential of a wider block. In a statement, the oil company said preliminary analysis of results from the FAN-1 exploration well showed 29 metres of net oil bearing reservoir in the Cretaceous sandstones. The drilling made no contact with any water in a gross oil bearing interval of more than 500 metres.
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Technical products group Diploma said it has struck a deal to buy 80% of Technopath Distribution for an undisclosed sum. Diploma said the deal also includes put and call options allowing the company to acquire the remaining 20% of the company over the next five years. Diploma said it expects the deal to be immediately earnings accretive.
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Spirent Communications warned that its revenue started to be hit as trading conditions softened in the latter part of the third quarter, and it expects revenue and operating profit in the fourth quarter to be lower than it had hoped. In a trading update, the company warned that demand levels dipped sharply as a result of merger activity and delays in capital expenditure, as future new technology deployments were being assessed in areas in which Spirent has increased its investments. It said the impact was being most felt in its networks and applications businesses.
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Carillion said the British government has announced that it will be the first company to benefit from a new facility designed to boost UK exports, and it has secured a GBP75 million deal with the support of the scheme to deliver some of the Dubai World Trade Centre District development.
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Gamma Communications said it will list on AIM on Friday, as it priced a placing of 44.1 million shares at 187 pence a share. In a statement, the company said the placing has raised about GBP82.6 million for the selling shareholders, or GBP79.9 million net of costs, and the number of shares placed are about half of those that will be in issue when it lists. It expects to have an initial market capitalisation of about GBP165.2 million when it lists based on the placing price. It didn't identify the selling shareholders.
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MARKETS
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UK stocks trade firmly in the red, as investors cut back risk positions ahead of Wednesday's Federal Reserve minutes release and Thursday's Bank of England interest rate decision. Mining stocks have come into focus after Rio Tinto, the leading blue-chip gainer, rejected Glencore's merger offer.
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FTSE 100: down 0.6% at 6,525.80
FTSE 250: down 0.8% at 15,153.21
AIM ALL-SHARE: down 0.4% at 737.81
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The pound declined against the dollar after UK industrial production data missed analysts' forecasts.
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GBP-USD: down at USD1.6046
EUR-USD: down at USD1.2595

GOLD: down at USD1205.44 per ounce
OIL (Brent): down at USD92.19 a barrel

(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK industrial output remained flat in August from July, data from the Office for National Statistics showed. That follows a 0.4% rise in July. The month-on-month increase in manufacturing slowed to 0.1% from 0.3% a month ago. Both industrial and manufacturing growth figures came in line with expectations. On a yearly basis, industrial production increased 2.5%, faster than the 2.2% rise in July. It was forecast to grow by 2.6%. At the same time, manufacturing advanced 3.9% following July's 3.5% rise. Economists had forecast growth to slow moderately to 3.4%.
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German industrial production dropped in August at its fastest pace since the height of the global financial crisis in early 2009, adding to signs that Europe's biggest economy could be facing a slowdown. Output contracted by a more-than-forecast 4% from July, when it had gained 1.6% on the previous month, the Ministry of Economics said. Analysts surveyed by dpa-AFX had predicted a 1.5% drop. "The trend is down," said Commerzbank economist Ralph Solveen. "At best, the German economy probably stagnated in the third quarter."
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The Bank of Japan kept its monetary policy unchanged at its October meeting as widely expected by economists. The bank maintained its pledge to increase the monetary base at an annual pace of about JPY60-70 trillion. The bank repeated that it will purchase Japanese government bonds so that their outstanding amount will rise at an annual pace of about JPY50 trillion and to purchase exchange-traded funds and Japan real estate investment trusts to increase at an annual pace of around JPY1 trillion and JPY30 billion, respectively. The bank said the Japan economy has continued to recover moderately as a trend, although some weakness particularly on the production side has been observed due mainly to the effects of the subsequent decline in demand following sales tax hike.
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Kurdish forces were fighting desperate street battles in their holdout of Kobane along the Turkish border Monday after Islamic State jihadists forced their way into the town, a local official told dpa. The Kurdish People's Protection Units (YPG) evacuated the last civilians, including local officials, to the Turkish border, said Mustafa Bali, head of the semi-official local Free Media Union. The YPG was fighting from house to house against the advancing jihadists, who had broken into the east of the town using tanks and car bombs, Bali said, adding that a few civilians had refused to leave.
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Hong Kong police arrested five people suspected of having ties to the computer hacking group Anonymous that declared an online war against authorities in the wake of democracy protests. The alleged cyber pirates, aged between 13 and 39, were held in connection with recent hacking attacks against the website of the semi-autonomous territory's government, police said. Police senior superintendent Hui Chun-tak said the suspects were accused of "accessing a computer with criminal or dishonest intent." The government said its website had suffered from cyber-attacks.
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A Madrid nurse is the first confirmed case of human-to-human transmission of the disease in Europe, Spanish media reported Monday citing health authorities. In Uganda, the government mobilized response teams and issued a public health alert after a man died of the Ebola-like Marburg virus, a senior health official said. In Washington, US President Barack Obama said the US would bolster screening of passengers at airports in Africa and the US to halt Ebola's spread after a traveller from Liberia came down with the haemmorrhagic disease in Texas.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun

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